October 27, 2010

Previously, if a parent needed to have their minor child or children reside with a non-parent, the non-parent would need a guardianship to allow the non-parent the proper authority to deal with the minor children’s health care providers and school systems.

The drawbacks included the time and cost it took to obtain the guardianship, and also the actual replacement of the parent’s rights to make decision for their children during the guardianship. Furthermore, it required the Court to both initiate the process and to terminate the guardianship.

Now, a new law has been enacted to allow a parent to provide a caregiver concurrent authority to make educational and health and medical related decisions for their minor child. The law provides that the parents can specify any actions that the caregiver shall not be able to take and that the parents continue to retain authority to take any and all actions relative to the children’s health care and education. In addition, the parent’s decision supersedes the caregiver’s decision if there is a dispute.

The document remains in effect until the date specified by the parent, which shall not exceed 2-years, and the document can be revoked by the parent at any time. The enactment of this law shall facilitate providing the necessary authority for a trusted non-parent caregiver care for your children’s well-being without the necessity of involving the court and the correlating time and expense that requires.

October 20, 2010

Finding the right home care employee is very similar to choosing the right professional - it takes time to be sure that the selection process is proper, and sometimes the only way that you know you have done a good job and selected the right person is after the fact, through experience. However, the proper process is important.

If an elder loved one is in need of homecare services, normally the first action is to search for candidates. The best ones will often come through word of mouth. If another client of an agency is satisfied with the care and support provided, this is normally a good reference point. If a personal reference is not available, then contacting a local discharge planner at a facility, or contacting the local senior citizen group, such as a council on aging, senior center, or social service agency may be the most appropriate means of finding the right agency.

The next step is to interview the caregiver candidates you find through your search. Keep searching and interviewing until you find the most appropriate person to serve. Make sure that that person has the requisite ability, experience, and compassion to attend your loved one at home. For instance, the proposed caregiver may have significant experience with a person regarding bathing, dressing, feeding, etc., but perhaps they have not dealt with a person with a memory disorder such as Alzheimer’s.

If the caregiver is merely providing light housework, cooking, and companionship, then would he or she also have the ability to transition into a higher level of care if and when the elder needs those services? If the caregiver needs to administer medication, do they have a license to do so? Also, the caregiver should be questioned as to whether they are available for additional hours if needed.

Most agencies have pre-printed agency agreements, and it is very important to review these contracts before signing them. Sometimes the agency is willing to negotiate a change in the contract, and other times they are mandated through a parent company to not adjust the standard agreement. In most agreements there are provisions that the termination of the employee may be at will, without any advance notice or pre-payment.

On the other hand, there may be a provision that if the family wishes to engage the services of the caregiver privately, then there is a significant “buyout” fee that the family must pay to the agency. Also, provisions regarding whether the caregiver is expected to use their own automobile for transportation to doctor’s appointments, sporting events, and activities such as movies, lunches, etc. should be outlined. Most reputable agencies are licensed and bonded, and if desired, these certificates of insurance and liability should be provided to the family prior to the contract’s completion.

The family should clearly define what they need and want for their loved one prior to the signing the contract. It is important for both parties to understand their duties, responsibilities, and the anticipated care prior to the signing of the contract to prevent problems in the future if the services are not provided as expected.But in getting back to the process of finding the right caregiver for your loved one, your gut reaction is rarely wrong. Do your homework and don’t be hasty.

October 15, 2010

With mid-term elections just around the corner, an issue that has lain dormant all year has been revived. The federal estate tax, (or lack thereof,) has become a rallying cry for politicians in Washington and around the country.

The Wall Street Journal reports that the topic been contentious in Senate races in Florida and Kentucky, as well as in House races in Missouri, Georgia, and other southern districts. President Obama favors a return to 2009 levels when the exemption amount was $3.5 million and the top rate was 45%.

A competing bill, introduced by Senate Republicans, would retroactively raise the estate tax applicable exclusion amount and GST exemption to $5 million, repeal the carryover basis rules, reunify the estate and gift tax exemptions, reduce the top estate and gift tax rate, (and the sole GST tax rate,) to 35%, permit a surviving spouse to take advantage of the unused applicable exclusion amount of the first spouse to die, and allow the executors of estates of decedents who die in 2010 to elect whether to be taxed under this new regime or under the present 2010 rules.

In the meantime, over 250 current congressional candidates have signed a pledge calling for the elimination of the estate tax altogether. Total elimination may be a hard sell in a time when there are big budget deficits, however, eliminating the estate tax would cost about $410 billion over the coming decade, assuming the 2001-level tax returns as scheduled next year, according to the nonpartisan Tax Policy Center.The 2001-level tax was an exemption of only $1 million and a top rate of 55%.

We can only hope that by the end of 2010, lawmakers will finally resolve the estate tax, but any resolution is unlikely to come before the mid-term elections.

October 13, 2010

There is always a lot of discussion regarding the need or desire to have a living trust. It should be noted that there are many different types of trusts, the principal differences being revocable versus irrevocable.

In a revocable trust, the person who creates it, the settlor or grantor, has the ability to receive all assets during their lifetime, and there is normally no tax benefit during lifetime nor any protection from long term care expenses.

In an irrevocable trust, the grantor gives up control or ownership of some or all of the assets, and therefore; there is going to be an intended benefit to the creator of the trust for tax as well as asset protection purposes.

The trade off is that giving up control and ownership of the asset may permit benefits for purposes mentioned, whereas the revocable trust will provide for no protection of assets. Also, it should be noted that in some states, the creation of an irrevocable trust for yourself does not reduce creditor protection in the event that you are sued, as long as the you are the primary beneficiary of the trust.

One of the benefits of both a revocable and irrevocable trust is that the assets are placed in the trust during lifetime, and this produces a net benefit of avoiding probate. Probate avoidance is important, as it will expedite the administration and settlement of your estate, keep all assets and terms of the trust private, as well as minimize fees and court costs in the process of settling the estate.

The terms of the trust are normally similar to that of a will. There will be distribution made to or for the benefit of your spouse, children, and grandchildren. If desired, distribution may be held by the trustee for the benefit of your children and grandchildren, with specific amounts or percentages of the assets being distributed at various ages or dates subsequent to the your death. Also, in the event that any beneficiary may be disabled, the fund may be held in a special needs trust, or supplemental needs trust, so that the benefits that the person is receiving from any governmental source will not be reduced or eliminated, but the funds in the trust may be available to or for the benefit of the beneficiary.

The living trust becomes effective the day it is signed, as opposed to a Will which becomes “alive” only upon the death of the creator. Funding the trust is important, as the assets in the trust at the date of death or date of disability will avoid any probate process, but if not, then the assets in the person’s name alone need to be transferred into the trust at death, which will require a probate process.

Therefore, if you have a trust, you should utilize it and fund it during your lifetime. Normally, you are your own initial trustee, so there is no accountability, filing fees, or requirement that any other individual or entity is aware of the investments and trust provisions. The trustee, normally the settlor, will turn over control to a successor trustee upon disability or death. Often, the person who creates a trust no longer wishes to manage the funds themselves or pay their own bills, and they delegate the authority to an individual or corporate trustee, who will then attend to all financial responsibilities so that the creator may enjoy life, travel, and not be restricted in the administration of the trust itself.

Living trusts are wonderful opportunities to avoid the probate process, but in some instances, it is not necessary, as the only assets that pass through probate are those assets in a person’s name alone. Therefore, there may be alternatives that are simpler and less expensive, such as transfer on death, joint ownership, and beneficiary designations, which will allow your assets to pass directly to other individuals or charities upon death. However, the trust may need to be maintained, in some cases, so that the beneficiaries do not receive funds outright, but rather, they are held, managed, and maintained for the benefit of the beneficiaries, but not necessarily in equal shares.

In short, a living trust is not right for everyone, but in many cases, it will attend to the needs of the individual, as well as the next generation.

October 07, 2010

Huguette Clark and Brooke Astor have a lot of things in common. They both were wealthy beyond wildest imagination, they both enjoyed their 104th birthday, and they both seem to have suffered elder abuse at the hands of the people they entrusted with their care.

In 2009, Brooke Astor's son and attorney were convicted of stealing $10 million from the socialite's $100 million fortune. Today, investigations into the actions of the advisors (attorney and account) for104-year-old Huguette Clark, a reclusive heiress worth half a billion dollars, are being conducted by the New York District Attorney’s Office.

It begs the question, who would steal from your grandmother? The answer unfortunately is far too common. In the Astor case, Brooke’s own son was convicted of grand larceny and in Huguette’s case, the lawyer and accountant are being investigated. Sadly, the issues surrounding the handling of the money of these two women are not unique.

It is estimated that near half a million elderly people are being abused by family, friends, and/or advisors, potentially taking $2.6 billion from infirm older Americans. The crime is known as elder financial abuse. Financial expert and consumer advocate, John Wasik has called it "the crime of the 21st century."

How does it happen? Many of these elderly people are too sick or infirm to know that abuse is taking place or to be able to report the abuse. If a person has dementia or alzheimer’s disease they are not going to know that their money is being squandered. For those that suspect there is an issue, fear of abuse, abandonment, and retribution also play a role in keeping them from reporting their concerns.

Commonly, the tool used by the criminals who steal from the elderly is the power of attorney document, which enables a designated person to make the financial decisions on behalf of another. The decisions of the person exercising the power of attorney are rarely reviewed, and the document has been called a "license to steal." Even though there is a fiduciary responsibility on the part of the person appointed, if no one is holding them accountable, they can get away with the crime.

In order to protect the elders in your life, it is of the utmost importance to get involved and stay involved in their lives. The crimes are often unreported or not pursued because relatives or friends are not involved in an elder’s life or assume that someone else is looking out for them. People are reluctant to get involved because they do not want to be perceived as a trouble-maker or greedy. The concern that they will be regarded as only looking out for their own interests in an inheritance also often keeps people from speaking up.

Remember that this is abuse, and if there is financial abuse, there is likely other forms of abuse occurring as well. Having as much information as possible is helpful. Ask questions, lots of them. Get documents like bank statements and investment records. Keep in mind you are not alone, every state has an Adult Protective Services agency. Find the one that serves your area, and make a report. The new healthcare reform package has a provision called the Elder Justice Act, which set aside nearly $800 million to expand efforts to investigate elder financial theft over the next four years. This is a growing problem and elder care professionals are working to stem this type of fraud and abuse.

But make no mistake, the power of attorney is not the problem itself. It is a good and very useful document, and as estate planners and elder law attorneys, we do recommend executing one and will continue to do so. However, the power of undue influence is so great that if a family member, or friend, or advisor is entrusted to care for an elder, they are often trusted to the point they can drive that elder to the bank and stand by while money is withdrawn and turned over to them. You would be surprised often this happens. You would also be pleasantly surprised to know that on numerous occasions, very astute and well intentioned bank tellers report the incidents. They get involved and by doing so are thankfully able to thwart a theft or prevent a future abuse.

Do not be confused, just because Susie is going to inherit all of her mother’s money when she dies, this does not mean that Susie can help herself to part, some, or all of her mom’s money during her mother’s lifetime. Susie is not entitled to it until she actually inherits it at the time of mom’s death. Susie may be paying for kid’s college education, trying to save her own house from foreclosure, or heading for a lavish vacation on Mom’s money, however, not one of those reasons is justification for taking mom’s money. Hey Susie...its not your money! Mom still has to pay for her healthcare, housing, and living expenses. And what if mom needs a vacation?. Once its gone, the money is gone, and that can happen pretty quickly these days. Do not be afraid to get involved.

If you suspect an elder is being taken advantage of by a family member, friend or anyone else. Do not sit idly by. If it were you, your grandmother or grandfather, wouldn’t you want someone to help?